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Boston Scientific (BSX) Q4 Earnings Top Estimates, Margins Up

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Boston Scientific Corporation (BSX - Free Report) posted adjusted earnings per share (EPS) of 45 cents for the fourth quarter of 2021, which marked a 95.7% rise from the year-ago figure. The figure topped the Zacks Consensus Estimate by a penny and matched the upper end of the adjusted earnings per share guidance range of 43-45 cents. The quarter’s adjustments included certain amortization expenses, goodwill impairment charges, litigation-related charges and acquisition/divestitures-related net charges, among others.

Reported EPS in the fourth quarter was 6 cents, marking a 50% decline from the year-ago quarter.

Full-year adjusted EPS was $1.63 indicating a 69.8% improvement from the year-ago period. The figure beat the Zacks Consensus Estimate by 1.2%. It also exceeded the company’s guidance range of $1.60-$1.62 per share.

Revenues of $3.13 billion in the fourth quarter improved 15.4% year over year on a reported basis and 16.9% on an operational basis (at constant exchange rate or CER). Revenues grew 15.1% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line exceeded the Zacks Consensus Estimate by 0.9%.

This compares with the company’s earlier-provided guidance in the range of approximately 13-17% on a reported basis (expected growth of 12-16% organically).

For 2021, the company reported revenues of $11.89 billion, resulting in a 19.9% rise on a reported basis and an 18.7% improvement on an operational basis. Revenues grew 18.9% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 0.3%. This compares to the company’s full-year revenue growth guidance range of 19-20% on a reported basis and 18-19% on an organic basis.

Q4 Revenues in Detail

In the fourth quarter, revenues rose 19.7% in the United States on a reported basis (same operationally). Revenues were up 12.3% in the Europe, Middle East and Africa region (up 16%); 14.3% in the Asia Pacific zone (up 17.4%); 17.9% in Latin America and Canada (up 18.8%) and 30.2% in emerging markets (up 31.6%).

Segmental Analysis

Boston Scientific currently has three global reportable segments: Cardiovascular, Rhythm and Neuro plus MedSurg.

The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, namely Interventional Cardiology and Peripheral Interventions were $808 million (up 40.1% year over year organically) and $462 million (up 9%), respectively, in the fourth quarter.

Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected a 4.5% year-over-year rise in organic sales to $514 million in the reported quarter.

Electrophysiology sales grew 15.6% year over year organically to $100 million.

Neuromodulation sales rose 5.8% year over year on an organic basis to $244 million.

Other segments like Endoscopy plus Urology and Pelvic Health (under the MedSurg broader group) recorded sales of $558 million (up 9.8% organically) and $441 million (up 8.7%), respectively.

For investors’ note, on Mar 1, 2021, Boston Scientific completed the sale of its Specialty Pharmaceuticals segment.

Margins

Gross margin in the fourth quarter expanded 588 basis points (bps) year over year to 68.9%. There was a 2.9% drop in the cost of products sold to $971 million.

Selling, general and administrative expenses rose 12.3% to $1.15 billion. Research and development expenses rose 11.9% to $320 million. Royalty expenses of $11 million declined 21.4% year over year. Adjusted operating margin improved 742 bps to 21.4% in the reported quarter.

2022 Guidance

Boston Scientific provided full-year 2022 guidance and also provided guidance for the first quarter.

Full-year net sales growth is expected in the range of 6-8% both on a reported and organic basis. The Zacks Consensus Estimate is currently pegged at $12.83 billion, indicating an 8.2% rise from 2021.  Full-year adjusted EPS is expected in the range of $1.73 to $1.79. The Zacks Consensus Estimate of $1.85 indicates a 14.7% improvement from the 2021 annual figure.

For the first quarter of 2022, revenue growth is projected in the range of approximately 5-8% on a reported basis (same organically). Adjusted earnings are expected in the range of 38-40 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 41 cents and $3.01 billion, respectively.

Our Take

Boston Scientific ended 2021 on a bullish note with fourth-quarter adjusted earnings and revenues surpassing the Zacks Consensus Estimate.  The company registered a year-over-year improvement in organic sales, indicating a strong rebound in the legacy business from the pandemic mayhem.

Organic revenues at each of its core business segments and geographies were up in the reported quarter. The company also reported margin expansions on a year-over-year basis. The initial 2022 guidance with strong organic growth expectations looks promising.

Zacks Rank and Stocks to Consider

Boston Scientific currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks that are supposed to report earnings soon are Cerner Corporation , Baxter International (BAX - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) .

The Zacks Consensus Estimate for Cerner’s fourth-quarter 2021 adjusted EPS is currently pegged at 88 cents. The consensus estimate for fourth-quarter 2021 revenues is pegged at $1.49 billion. The company currently carries a Zacks Rank #2 (Buy).

Cerner has an estimated long-term growth rate of 12.8%. CERN’s earnings yield of 4% compares favorably with the industry’s negative yield.

Baxter currently has a Zacks Rank #1. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS is currently pegged at $1.03. The consensus estimate for fourth-quarter revenues is pegged at $3.35 billion.

Baxter has an estimated long-term growth rate of 9.5%. BAX’s earnings yield of 4.9% compares favorably with the industry’s negative yield.

AMN Healthcare currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS is currently pegged at $2.58. The consensus estimate for its revenues stands at $1.28 billion.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings yield of 6.7% compares favorably with the industry’s 1.1%.


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